Hungary in Row with EU over Tax Exemption on National Booze

Brussels took Hungary to the European Court of Justice again, this time hitting a very soft spot: Hungary’s national alcoholic beverage, the palinka.

Allowing people to make below 50 liters a year of their own palinka without having to pay excise taxes was the first move Prime Minister Viktor Orban’s government made when it came to power in 2010. It was a very popular measure–distilling palinka is very widespread in the Hungarian countryside, the higher the alcohol level (measured in degrees), the better.

Drinking homemade booze is not unique to Hungary in the European Union, that’s why the Brussels regulation is also very tame on excise tax for quantities below 50 liters a year per household. Below this quantity, EU law allows countries to apply a discount excise tax on liquor made from home-grown fruits and ingredients, but at least half of the excise tax level of the given member state.

Advertisement

Tax-free is not an option, however, that’s why the case went to the European Court of Justice.

Hungary’s economy ministry said it would fight there to keep the exemption. Some EU countries such as Austria, Germany, Slovenia and Portugal make tax exemptions for small amounts of home-distilled spirits, it said.

Very strong palinkas are called “fence-jaggers” and are a good way to indicate one’s Hungarian origins. Many Hungarians tell tales of making their Polish friends drink palinka and watch them go down.

Hungarians consume about 1 million liters of palinka a year, and there was a slight rise in 2011, Napi Gazdasag reported earlier, adding consumption is on the rise among 30-40-year-olds. Fresh 2012 data will be available on Friday, said Laszlo Mihalyi, the president of the National Palinka Committee.

A court verdict against Hungary would mean a heavy fine for the country, but neither the ministry nor the European Court gave an estimate of the amount.

There are three infringement cases against Hungary at the Court beside this one, and Mr. Orban’s government has already been made to amend some of its regulation in line with court rulings.

Comments (5 of 15)

Ah yes.... the EU has again finally let the EU leftwing parties talk it into picking another sh#t-stiring fight with Hungary. The 0% excise on pálinka 'was the first move Prime Minister Viktor Orban’s government made when it came to power in 2010' as you state ms gulyas, so here we are 3 YEARS LATER and finally the EU has decided to pick on Hungary again. And for what? A few million forints worth of excise revenue? How pathetic. Why didn't they voice their conerns back wth the law was first created? Because the EU-dominating leftwingers had other bigger issues to try to castrate the new government with, eg., the new constitution, media laws, etc. So now that those 'big' issues have been resolved, now they're nit-picking just to cause more trouble becuase THEY'RE NOBODIES IN HUNGARY. The whole leftwing (whom you and ms.feher seem so blindly to support) are just a pathetic joke in Hungary now that only a few sad old party-kadars blindly believe what b#stards like gyurcsany and bajnai tell them. The rest of the population see through their lies so aren't taken in by this latest b#llocks from the EU. And Barroso is concerned about 'democracy' and 'human rights' in Hungary? Well barroso, buddy, what about the rights of Hungarian minorities in the countries around Hungary? Will you speak up after the recent street-bashing and death of Hungarian youth in Serbia, or will you (like the local authorities) just say 'its not race related' as you also do barroso?
And why doesn't the WSJ report on the pro-autonomy demonstrations recently held for the Székely region in Romania? It wasn't in today's Romania summary so its clear to see that the staff that 'report' on Hungary for the WSJ are NOT ONLY ANTI-ORBAN, BUT ANTI-HUNGARIAN. This call for Székely autonomy (and the one for Vajdasági autonomy in Serbia) have been totally IGNORED by the WSJ. Nice one, b#tches.....

5:27 am March 18, 2013

Hungary needs the JOBBIK Party / PiLiS wrote:

To " * " :
You're a Brilliant for a zombi - so far-, but It depends how clean and how much of "newbie chick-Godess" you R, for the enthusiastic start, where should I send the Bills ?

5:24 am March 18, 2013

Hungary needs the JOBBIK Party / PiLiS wrote:

To " * " : You're a Brilliant for a zambi - so far-, but It depends how clean and how much of "newbie chick-Godess" you R, for the enthusiastic start, where should I send the Bills ?

1:23 am March 18, 2013

* wrote:

I am interested in learning about Hungarian politics and what is happening in the country. Thank you all for your informative comments filling in what the reporters omitted.

About Emerging Europe

Emerging Europe Real Time provides sharp analysis and insight into what’s making news in Central and Eastern Europe. Drawing on the expertise of our reporters in the Czech Republic, Hungary, Poland, Russia and Turkey, the site provides an inside track on economics, politics and business in this emerging part of the European continent.